Petition for Writ of Certiorari — Vacances Heliades S. A. v. AAR International, Inc.

Supreme Court, U.S.

FILED

@1 346 AUG 2 72001

No.

=z SS

IN THE

Supreme Court of the United States

VACANCES HELIADES S.A. AND

NIMELIAS ENTERPRISES S.A..,

Petitioners,

V.

AAR INTERNATIONAL, INC.,

Respondent.

ON PETITION For A Writ OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE SEVENTH CIRCUIT

PETITION FOR A WRIT OF CERTIORARI

KONSTANTINOS ARMIROS

GARY I. BLACKMAN

LEVENFELD PEARLSTEIN

33 West Monroe Street

21st Floor

Chicago, Illinois 60603

(312) 346-8380

GEORGE N. KOTSONIS

LAW OFFICES OF

GEORGE N. KOTSONIS

Century Building, Suite 610

230 West Wells Street

Milwaukee, Wisconsin 53203

(414) 271-7474

August 2001

PAUL GONSON

Counsel of Record

STEPHEN G. TOPETZES

ERIN K. ARDALE

KIRKPATRICK & LOCKHART LLP

1800 Massachusetts Ave., N.W.

Second Floor

Washington, D.C. 20036

(202) 778-9000

Balmar Legal Publishing Services, Washington, DC 20005 (202) 682-9800

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QUESTION PRESENTED

In determining in which forum a case should proceed,

must the court give dispositive weight to a forum selection

clause in the agreement between the parties, or may it

consider the ciause as one factor together with other factors?

ii

STATEMENT PURSUANT TO RULE 29.6

Petitioner Vacances Heliades S.A. states that it has no

corporate parent and that no publicly held company owns ten

percent or more of Vacances Heliades S.A.’s stock.

Petitioner Nimelias Enterprises S.A. states that it is a

wholly-owned subsidiary of Vacances Heliades S.A.

on Oe ee ee ee ee

TABLE OF CONTENTS

Page

EEE ES a ED i

STATEMENT PURSUANT TO RULE 29.6 ...0.0.....0.cccccccceeee il

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SEE TD ccccnccnusnnssscquicsacsocceeseneesssceiznsonses iV

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STATEMENT OF JURISDICTION .....0..........ccccccscsscseseseeeeee 2

STATUTORY PROVISION INVOLVED ....0.0.....cccccccecceseeee 2

SPE UIO ED SOU. BUMS GPA ccccscensnsncasscesccesseocneuseccestonencosene 2

REASONS FOR GRANTING THE PETITION .........0.......... 5

iV

TABLE OF AUTHORITIES

Cases: j Page

Blanco v. Banco Indus. de Venezuela, S.A., 997 F.2d 974

ER ge SUN icteisiiiiecetaethaaceiabsitine dicing a all 8,9

The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972) ... passim

Caldas & Sons, Inc. v. Willingham, 17 F.3d 123 (Sth Cir.

I cicccasiesisln-oivaseabschtsnsnshaciiphdsasibesemnencettuadliuddeadeanagalisadsaauadeii 10

Citro Florida, Inc. v. Citrovale, S.A., 760 F.2d 1231

PN I dacinisdesnchinictastaalscnaciadaitae tala tasnttacaseescnateaiceabietabh 10

Com Systems, Inc. v. Nahmad, 1991 U.S. App. LEXIS

xe ee FS . _ | een eve eNO 9-10

Fil Leveraged U.S. Government Bond Fund Ltd. v. TCW

Funds Mgmt., Inc., 1998 U.S. App. LEXIS 17586

eels Se ME I cccalissncixicnisistnsheciinceenistiioinidamentiblinanasies 9

Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947) 0... eee 7

Hunt Wesson Foods, Inc. v. Supreme Oil Co., 817 F.2d

Be SUED ilsciicctnicneisinsncnscniosictinsilailtniniipialddhiansaniecaaiéia 10

Keaty v. Freeport Indonesia, Inc., 503 F.2d 955 (Sth Cir.

SUPT cisinchinsniiciincarneieonasiibadaneejiiiadicssalisiainlaiviabiiainiiadadaaaiaiin 10

Milk ‘N’ More v. Beavert, 963 F.2d 1342 (10th Cir.

SII ascvienhindssinnbidacnssiaieteciptonidneh cneteheandaspaisiplalanpisacdieteinapbiaiaiadamanadadat 11

N. Cal. Dist. Council of Laborers v. Pittsburg-Des

Moines Steel Co., 69 F.3d 1034 (9th Cir. 1995) .............. 10

Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) ................. 7

Royal Bed & Spring Co., Inc. v. Famoussul Indus. e

Comercio de Moveis Lida. 906 F.2d 45

CIE: TID accesstiscnneiscneetpniigtiendiisinninenabaamaeiedaiciniasideieiiiiints 6,7

Seward v. Devine, 888 F.2d 957 (2d Cir. 1989)...............0e 10

Re ee ere WER oreany

Recher eh Os:

Vv

Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22

CITED natscietabisisnieipeneiahaimenteseuainaamna ~ Sy ee

Statutes:

Be AE. 9 VO Ce wi tntethiictncceadeeneeeeds, pay

BO Res STA) Ce stistssittentnpiietarinabiiiaies 2

Miscellaneous:

Patrick J. Borchers, Forum Selection Agreements in the

Federal Courts After Carnival Cruise: A Proposal for

Congressional Reform, 67 WASH. L. REV. 55 (1992)......... 6

Phoebe Kornfeld, The Enforcement of Forum-Selection

Clauses After Stewart Organization, Inc. v. Ricoh

Corporation, 6 ALASKA L. REV. 175 (1989) ..........cc. 6-7

Leandra Lederman, Viva Zapata!: Toward A Rational

System of Forum-Selection Clause Enforcement in

Diversity Cases, 66 N.Y.U. L. REV. 422 (1991) «0.0.0.0... 7

17 MOORE’S FEDERAL PRACTICE § 111.03 (2000)..........00...... 7

17 MOORE’S FEDERAL PRACTICE § 111.13 (2000).................. 7

17 MOORE’S FEDERAL PRACTICE § 111.74 (2000) .......0000000... 7

Shaan’ on Lain WE sci isicoicnsiDuaciciamasuaatnaiene 5

David H. Taylor, The Forum Selection Clause: A Tale of

Two Concepts, 66 TEMPLE L. REV. 787 (1993) ..............000. 7

UNITED STATES TRADE REPRESENTATIVE, 2001 TRADE

POLICY AGENDA AND 2000 ANNUAL REPORT OF THE

PRESIDENT OF THE UNITED STATES ON THE TRADE

AGREEMENTS PROGRAM (March 2001) ...............::sseesseeeeeeee 5

vi

TABLE OF APPENDICES

Page

Appendix A — Judgment Of The United States Court Of

Appeals For The Seventh Circuit, Dated And Filed

AGE Bi, FOE scececcsecesesseevecnenessensennteasnnemnmentannnnsansanianiens A-l

Appendix B — Opinion Of The United States Court Of

Appeals For The Seventh Circuit, Dated And Filed

Agth 27 FETE nnsieninniiiniiaaael B-1

Appendix C — Judgment In A Civil Case Of The United

States District Court For The Northern District of

Illinois, Eastern Division, Dated And Filed June 13,

Appendix D —- Memorandum Opinion And Order Of The

United States District Court For The Northern District

of Illinois, Eastern Division, Dated And Filed June 13,

FOE. cxceacsescsmssssesintieniesanndininaaenn D-1

Appendix E — Section 20.B. “Nonexclusive Jurisdiction

in Illinois,” Aircraft Lease Agreement Between

AAR International And Vacances Heliades S.A.,

BataG DEa 06, FIGS cccscecssssenesnsiniasminemmaaaeiaae E-1

No.

IN THE

Supreme Court of the United States

VACANCES HELIADES S.A. AND

NIMELIAS ENTERPRISES S.A..

Petitioners,

Vv.

AAR INTERNATIONAL, INC.,

Respondent.

PETITION For A Writ OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS For THE SEVENTH CIRCUIT

The Petitioners respectfully pray that a writ of certiorari

be issued to review the order and opinion of the United States

Court of Appeals for the Seventh Circuit entered on April 27,

2001.

OPINIONS BELOW

The opinion of the court of appeals (App. B, infra, B-1

to B-26) is reported at AAR Int’l, Inc. v. Nimelias Enter. S.A.,

250 F.3d 527 (7th Cir. 2001). The opinion of the United

States District Court for the Northern District of Illinois (App.

D, infra, D-1 to D-8) is reported at AAR Int'l, Inc. v.

Vacances Heliades S.A., 100 F. Supp. 2d 875 (N.D. Ill. 2001).

2

STATEMENT OF JURISDICTION

The judgment of the Seventh Circuit was entered on

April 27, 2001. On July 18, 2001, Justice Stevens extended

the time within which to file a petition for a writ of certiorari

to and including August 25, 2001. The jurisdiction of this

Court is invoked under 28 U.S.C. § 1254(1).

STATUTORY PROVISION INVOLVED

The doctrine of forum non conveniens is not statutory.

28 U.S.C. § 1404(a) provides that “For the convenience

of parties and witnesses, in the interest of justice, a district

court may transfer any civil action to any other district or

division where it might have been brought.”

STATEMENT OF THE CASE

1. This case involves the weight to be given to a

clause in a business agreement between sophisticated

corporations designating a forum for resolution of disputes

about the agreement. These forum selection clauses are

common in domestic and international agreements, because

parties seek certainty. Confusion in the case law has

undermined this certainty in two important respects: first, as

a general matter, there is confusion regarding whether these

clauses are to be dispositive or merely a factor when a court

considers a motion to dismiss for forum non conveniens or to

transfer venue under 28 U.S.C. § 1404(a); and, second, there

is confusion regarding the extent to which the answer to that

question is affected by whether the forum selection clause

permits only one forum (is “exclusive”) or more than one

forum (is “nonexclusive”), and whether the forum selection

clause’s language requires the forum (is “mandatory”) or

merely permits it (is “permissive”).

The United States courts of appeal are divided in both

respects. It is significant that this division is occasioned by

two opinions of this Court with respect to forum selection

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3

clauses. In The Bremen v. Zapata Off-Shore Co., this Court

directed the district courts, in considering a motion to dismiss

for forum non conveniens, to give a forum selection clause

dispositive weight. 407 U.S. 1, 15 (1972). On the other hand,

in Stewart Organization, Inc. v. Ricoh Corp., this Court

permitted the district courts, in considering motions to

transfer venue pursuant to 28 U.S.C. § 1404(a), to treat a

forum selection clause as only one of several factors. 487

U.S. 22, 29 (1988).

What has resulted is a The Bremen line of cases and a

Stewart line of cases at odds with each other. For the most

part, The Bremen line of cases gives the forum selection

clause dispositive effect, while the Stewart cases do not. The

consequence is that if the selected forum is another federal

court, a party will usually seek to enforce the agreement with

a motion to transfer venue under section 1404(a) and the

clause will be given a weak effect, whereas if the selected

forum is a foreign court, the agreement will generally be

enforced by a forum non conveniens motion and the clause

will be given a stronger effect.

Neither The Bremen nor Stewart speaks to the effect to

be given to clauses that are phrased in permissive rather than

mandatory terms or that select more than one possible forum.

2. Petitioner Vacances Heliades S.A. (“VH”) is a

French corporation. App. D, infra, D-1, n.1. In May 1998,

VH leased an airplane from Respondent AAR International,

Inc. (“AAR”), App. B, infra, B-2, an Illinois corporation,

App. D, infra, D-1, n.1, and, in turn, subleased the airplane to

Nimelias Enterprises S.A, App. B, infra, B-2, a Cypriot

corporation. App. D, infra, D-1, n. 1. After the airplane

experienced mechanical problems, VH was forced to remove

an engine from the airplane and repair it at considerable

expense. App. B, infra, B-4. Contending that AAR breached

the lease’s provision guaranteeing performance of the

engines, VH sued AAR in court in Greece, where the

4

petitioners did business and where the airplane was located.

Id.

A clause in the lease agreement captioned

“Nonexclusive Jurisdiction in Illinois,” provided that either

party could bring a case in the United States District Court for

the Northern District of Illinois, in the Illinois Supreme Court,

in any jurisdiction in which either party or its assets may be

found, or in any other appropriate jurisdiction. App. E, infra,

E-1. The clause further provided that neither party would

challenge the other party’s choice of forum in Illinois as

inconvenient. Jd. at E-2.

—

Instead of asserting its own claims (that VH was in

default of its lease obligations) as counterclaims in the Greek

action, AAR later chose to bring an original action against

VH in the United States District Court for the Northern

District of Illinois, Eastern Division. App. D, infra, D-2.

After AAR filed suit in that court, VH moved for the district

court to abstain in favor of the earlier filed action in Greece

and for dismissal on forum non conveniens grounds. Id. The

district court granted abstention but did not reach the forum

non conveniens issue. Id. at D-7.

On appeal, the United States Court of Appeals for the

Seventh Circuit reversed the abstention ruling and decided the

forum non conveniens issue. App. B, infra, B-1 to B-26. It

observed that “the district court did not address [that issue],

presumably deeming it mooted by its decision to abstain the

action.” Jd. at B-19. VH objected to the court of appeals’

consideration of this matter, for there had been no ruling by

the district court. Jd. The court of appeals noted that, as a

general rule, an appellate court may not consider an issue not

passed on below. Id. at B-20. But it viewed “the proper

resolution of the issue” as “clear” and “beyond any doubt”

and proceeded to decide the question. Id.

The court of appeals treated the combination of the

permissive forum selection clause’s provision that the

5

Northern District of Illinois would be an appropriate forum to

resolve a dispute together with the provision that a party

would not object to the other party’s choice of forum in

Illinois on convenience grounds as tantamount to a mandatory

forum selection clause. Jd. at B-24. It then held, stating that

it was following The Bremen, that the so-deemed

“mandatory” forum selection clause was dispositive of the

forum non conveniens motion.’ Id. In doing so, the Seventh

Circuit noted that other circuits disagreed with its approach.

Id. at B-22 to B-24. Because it believed that its ruling was

compelled as a matter of law, the court of appeals ordered the

district court to deny VH’s motion to dismiss on grounds of

forum non conveniens. Id. at B-25. :

REASONS FOR GRANTING THE PETITION

A. Certainty in international agreements, recognized as

important in The Bremen in 1972, is needed even more today.

U.S. trade increased 25-fold between 1970 and 2000 and the

United States is the largest trading nation in the world.’

Issues as to the selection of a proper forum for the

resolution of disputes have been very much alive in the

courts. Shepards shows 1515 federal and state cases citing

The Bremen and 737 citing Stewart.’

' The Seventh Circuit said it would not apply the provision that a

party would not object to the other’s choice of forum in Illinois to either

the doctrine of abstention, see App. B, infra, B-19 or the first filed rule.

Id. at B-24, n.10.

, See UNITED STATES TRADE REPRESENTATIVE, 2001 TRADE POLICY

AGENDA AND 2000 ANNUAL REPORT OF THE PRESIDENT OF THE UNITED

STATES ON THE TRADE AGREEMENTS PROGRAM, Appendix I at 1 (March

2001).

* Shepards® on Lexis Nexis™ was accessed on August 16, 2001.

Note: The total number of cases will be less than the arithmetic total of _

these two numbers because some cases have cited both The Bremen and

Stewart.

ee

6

The conflicts and confusion in the courts with respect to

forum selection clauses warrant review by this Court. The

decision of the court of appeals in this case raises these issues

appropriately. The court of appeals candidly noted that other

circuits disagree with its holding both as to the dispositive

effect of a forum selection clause and as to its view that the

type of clause in this case was mandatory, and thus

dispositive.

B. The Seventh Circuit’s decision in this case

(following The Bremen) notes that it is in conflict with the

First Circuit’s decision in Royal Bed & Spring Co., Inc. v.

Famoussul Indus. e Comercio de Moveis Ltda., 906 F.2d 45

(1° Cir. 1990) (following Stewart). App. B, infra, B-22. In

Royal Bed, the First Circuit said:

“... [SJection 1404(a) does not apply. Nonetheless,

even though a foreign jurisdiction was chosen by

the parties, that fact should not preclude the

application of sound principles of forum non

conveniens enunciated in Stewart and similar

cases .... [T]he forum-selection provision is not

given dispositive effect. Rather, it is simply one of

the factors that should be considered and balanced

by the courts in the exercise of sound discretion.

See Stewart... .”

906 F.2d at 51.

It is difficult to understand why an identical forum

selection clause should be treated differently in motions to

transfer venue and in motions to dismiss on grounds of forum

non conveniens. One commentator has described this

difference as a “bizarre dichotomy.” The purpose of the two

* See Patrick J. Borchers, Forum Selection Agreements in the Federal

Courts After Carnival Cruise: A Proposal for Congressional Reform, 67

WASH. L. REV. 55, 70-71 (1992). Other commentators also criticize this

dichotomy. See Phoebe Kornfeld, The Enforcement of Forum-Selection

Clauses After Stewart Organization, Inc. v. Ricoh Corporation, 6 ALASKA

7

procedural mechanisms is essentially the same. The only real

difference is that a motion to dismiss for forum non

conveniens must be made when the alternative forum is not

within the United States because a motion to transfer venue

under 28 U.S.C. § 1404(a) will not be available. It is not

surprising that, in the absence of a forum selection clause,

federal courts consider similar factors when deciding motions

to transfer venue and motions to dismiss on grounds of forum

non conveniens.°

Because the Seventh Circuit’s decision in this case

conflicts with that of the First Circuit in Royal Bed with

respect to the dispositive effect to be given to forum selection

clauses in international agreements under the forum non

conveniens doctrine, and because both decisions continue the

confusion engendered by The Bremen and Stewart, review by

this Court is warranted.

C. Review is also warranted because the Seventh

Circuit’s interpretation of the forum selection clause conflicts

with interpretations of other courts of appeal.

Some courts of appeal expressly distinguish between

“mandatory” and “permissive” forum selection clauses when

considering motions to dismiss for forum non conveniens.

These courts give a “mandatory” forum selection clause

L. REV. 175, 191 (1989) (“Altogether, under Stewart, contracts become

equivocal and the contracting parties lose predictability and certainty in

their relationship.”); Leandra Lederman, Viva Zapata!: Toward A Rational

System of Forum-Selection Clause Enforcement in Diversity Cases, 66

N.Y.U. L. REV. 422 (1991); David H. Taylor, The Forum Selection

Clause: A Tale of Two Concepts, 66 TEMPLE L. REV. 787 (1993).

See 17 MOORE’S FEDERAL PRACTICE § 111.03 at *4, n.9 (transfer

factors same as forum non conveniens factors); 17 MOORE’S FEDERAL

PRACTICE § 111.74 at *8 (forum non conveniens factors); 17 MOORE’S

FEDERAL PRACTICE § 111.13 at *4 (Section 1404 factors). See also Piper

Aircraft Co. v. Reyno, 454 U.S. 235, 254 n.22 (1981); Gulf Oil Corp. v.

Gilbert, 330 U.S. 501, 508-509 (1947); and Stewart, 487 U.S. at 29.

8

dispositive weight when considering such a motion but weigh

a “permissive” forum selection clause as only one factor in

the analysis. However, when it is not clear that a clause is

“mandatory” — i.e., when the clause does not unambiguously

state that a party “must” in all circumstances go to only one

particular forum — the courts of appeal seem confused about

whether that clause should be characterized as “mandatory”

or “permissive.” As a result, nomenclature and drafting

confusion undermine desired certainty concerning such

agreements.

In the case presented for review, the Seventh Circuit

interpreted the parties’ forum selection clause as

“mandatory,” because, even though it was drafted with

“permissive” and “nonexclusive” language (i.e., it provided

that suit “may” be brought in Illinois and in other

jurisdictions), it also provided that a party would not object to

another party’s choice of venue in Illinois on the ground that

such a court is an inconvenient forum. App. B, infra, B-24.

As a result, the court held that the strict standards of The

Bremen applied, making the clause dispositive of VH’s

motion to dismiss for forum non conveniens. Id.

The Seventh Circuit acknowledged that the Second

Circuit took the contrary view of a similar clause in Blanco v.

Banco Indus. de Venezuela, S.A., 997 F.2d 974 (2d Cir. 1993).

App. B, infra, B-24. In Blanco, as in this case, the forum

selection clause was drafted in both “permissive” and

“nonexclusive” language (i.e., it provided that suit “may” be

brought in an English court, a New York state court, a New

York federal court, or a court in the City of Caracas,

Venezuela). Blanco, 997 F.2d at 979. In the case presented

for review, the Seventh Circuit asserted that Blanco’s

conclusion was “reasonable,” App. B, infra, B-24, because, as

Blanco said, the clause was not strengthened by any language

adding a party’s “irrevocable consent’” to a suit in the

9

designated fora or a waiver of forum non conveniens

objections.” Blanco, 997 F.2d at 979.

It is hard to understand why added language in a forum

selection clause specifically stating that a party will not object

to a chosen forum should have any effect at all, much less

turn a decision one way or the other. Presumably, such

nonobjections would be implicit in the parties’ agreement to

the clause. This Court seemed to say as much in The Bremen:

“...[It] is difficult to see why any such claim of

inconvenience should be heard to render the forum clause

unenforceable.” 407 U.S. at 16.

The Ninth Circuit arrived at the same conclusion of

unenforceability as the Second Circuit in Blanco, using a

different approach. In Fil Leveraged U.S. Government Bond

Fund Ltd. v. TCW Funds Mgmt., Inc., the Ninth Circuit

equated “exclusive” with “mandatory” and “nonexclusive”

with “permissive.” 1998 U.S. App. LEXIS 17586, at *5 (9th

Cir. July 29, 1998). Since the forum selection clause was

“nonexclusive,” the Fil court held that The Bremen’s

heightened standards did not apply. Jd. at *6. Fil is in direct

conflict with the case presented for review. See also the

following Ninth Circuit cases in contexts other than forum

non conveniens: Com Systems, Inc. v. Nahmad, 1991 U.S.

App. LEXIS 1318 (9th Cir. January 28, 1991) (affirming the

district court’s denial of a motion to dismiss based on a forum

selection clause solely because the forum selection clause

used the expressly permissive, rather than mandatory,

Fi Solely because of “the nonmandatory words the parties chose to

express their agreement...and not...because the permissive clause

contemplates more than one forum,” the court in Blanco distinguished The

Bremen’s exclusive and mandatory clause and refused to apply the stricter

standards to the forum non conveniens motion. Blanco, 997 F.3d at 979.

In Blanco, the dissenting judge accused the majority of the panel of ruling

on the basis that the clause was “nonexclusive,” see 997 F.2d at 985, but

the majority denied it was doing so. Id. at 979.

10

language “may” (“venue may be laid in Dade County”), and

not because of the clause’s nonexclusivity); N. Cal. Dist.

Council of Laborers v. Pittsburg-Des Moines Steel Co., 69

F.3d 1034, 1036 (9th Cir. 1995) (holding that a forum

selection clause providing that an arbitration award “shall” be

enforceable by a petition filed in a particular California state

court was “permissive” because it said nothing about

exclusive jurisdiction and instead only indicated consent to

jurisdiction in that court); Hunt Wesson Foods, Inc. v.

Supreme Oil Co., 817 F.2d 75, 77 (9th Cir. 1987) (holding

that a clause that provided that “the courts of California,

Orange County, shall have jurisdiction” did not provide for

exclusive jurisdiction, and therefore was permissive).

See also the following Fifth Circuit cases: Caldas &

Sons, Inc. v. Willingham, 17 F.3d 123, 127, 128 (Sth Cir.

1994) (holding that, as opposed to the unambiguous

mandatory forum selection clause in The Bremen, the parties’

nonexclusive clause providing that “the courts of Zurich shall

be applicable” was “permissive” because it merely indicated

that the parties consented to — rather than required —

jurisdiction in Zurich); Keaty v. Freeport Indonesia, Inc., 503

F.2d 955, 956 (Sth Cir. .1974) (holding as permissive a clause

that provided that “the parties submit to the jurisdiction of the

courts of New York”). And see the Eleventh Circuit case,

Citro Florida, Inc. v. Citrovare, S.A., 760 F.2d 1231, 1231-32

(11th Cir. 1985) (emphasis in original) (The forum selection

clause “place of jurisdiction is Sao Paulo/Brazil’ does not

Clearly specify that Sao Paulo is the only place of

jurisdiction....The Bremen court, however, was faced with a

much more specific clause. There the contract provided that

any dispute “must be treated before the London Court of

Justice.’”y’

” These cases, in turn, appear to conflict with, e.g., Seward v. Devine,

888 F.2d 957, 962 (2d Cir. 1989) (affirming dismissal based on a

mandatory forum selection clause because the forum selection clause

11

D. The decision in this case was incorrect.

1. Although the court of appeals stated that its

decision was made on the basis of The Bremen, that case does

not support the court of appeals’ decision. In The Bremen,

the parties contracted to transport an oil rig from Louisiana to

the Adriatic Sea. 407 U.S. at 2. During transportation, the rig

was damaged and towed to Tampa, Florida, where one party

filed a suit in the federal district court. Jd. at 3. The other

party asked the court to enforce the forum selection clause

contained in the contract, requiring exclusive jurisdiction in

the High Court of Justice in London. Jd.

This Court in The Bremen placed much emphasis on the

certainty of that forum. This Court said:

“It cannot be doubted for a moment that the parties

sought to provide for a neutral forum for the

resolution of any disputes arising during the tow.

Manifestly much uncertainty and great inconvenience

to both parties could arise if a suit could be

maintained in any jurisdiction in which an accident

occurred or if jurisdiction were left to any place where

the Bremen or Unterweser might happen to be found.

The elimination of ail such uncertainty by agreeing

in advance in a forum acceptable to both parties is

an indispensable element of international trade,

commerce, and contracting.”

Id. at 13-14 (footnote omitted).

provided that a particular New York state court “shall” have jurisdiction)

and Milk ‘N’ More v. Beavert, 963 F.2d 1342, 1345-1346, (10° Cir. 1992)

(affirming a district court’s remand to state court because it was

sufficiently clear that a forum selection clause providing that “venue shall

be proper...in Johnson County, Kansas” required venue in that particular

State court).

12

The forum selection clause in this case was not at all like

the exclusive selection clause praised in The Bremen as

eliminating uncertainty. It was, rather, like the other situation

that this Court in The Bremen decried —“. . . any place where

the Bremen or Unterweser might happen to be found.” /d.

- As already noted, the forum selection clause in this case

permits, in addition to courts in Illinois, “jurisdiction where

[either party] or its assets may be found... or in any other

appropriate jurisdiction.” App. E, infra, E-1. In The Bremen,

this Court was concerned about multiple jurisdictions

between Louisiana and the Adriatic Sea. The subject matter

of the lease in this case is a Boeing 737 airplane. Jurisdiction

is potentially available virtually anywhere in the world.

2. “The proper resolution of this issue” was scarcely

“beyond any doubt,” as the Seventh Circuit said when it

undertook to consider the issue in the first instance and then

ruled as a matter of law. It should have remanded to the

district court for its initial determination.

E. This is an area of the law where predictability is

important. Business, their lawyers, and courts will benefit

from a clarification of the conflicts that divide the courts of

appeal. A possible solution to the current dichotomy between

The Bremen and Stewart lines of cases and the confusion

about wording could be (1) that a forum selection clause that

requires venue in only one jurisdiction be presumptively

dispositive in every context in which a district court is to

make a determination as to which forum a case is to proceed

in, and (2) that a clause that does not require such exclusive

venue be one factor to be given such weight as the court shall

determine, together with other factors, in its discretion.

CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully submitted,

KONSTANTINOS ARMIROS PAUL GONSON

LEVENFELD PEARLSTEIN Counsel of Record

33 West Monroe Street

21st Floor

Chicago, Illinois 60603

(312) 346-8380

GEORGE N. KOTSONIS

LAW OFFICES OF

GEORGE N. KOTSONIS

Century Building, Suite 610

230 West Wells Street

Milwaukee, Wisconsin 53203

(414) 271-7474

August 2001

STEPHEN G. TOPETZES

ERIN K. ARDALE

KIRKPATRICK & LOCKHART

1800 Massachusetts Ave., N.W. LLP

Second Floor

Washington, D.C. 20036

(202) 778-9000

A-l

APPENDIX A:

JUDGMENT OF THE UNITED STATES COURT OF

APPEALS FOR THE SEVENTH CIRCUIT,

DATED AND FILED APRIL 27, 2001

United States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

JUDGMENT — WITH ORAL ARGUMENT

Date: April 27, 2001

BEFORE: Honorable WILLIAM J. BAUER,

Circuit Judge

Honorable DANIEL A. MANION,

Circuit Judge

Honorable LANA DIAMOND ROVNER,

Circuit Judge

No. 00-2737

AAR INTERNATIONAL, INCORPORATED

Plaintiff — Appellant,

Vv.

NIMELIAS ENTERPRISES S.A., VACANCES HELIADES

S.A. and PRINCESS AIRLINES S.A..,

Defendants — Appellees.

A-2

Appeal from the United States District Court for the

Northern District of Illinois, Eastern Division

No. 99 C 8090, Elaine E. Bucklo, Judge

For the foregoing reasons, we REVERSE, with costs, the

district court’s decision to abstain and REMAND with

instructions to vacate the dismissal order and to deny the

appellees’ motion to dismiss on grounds of forum non

conveniens. The above is in accordance with the decision of

this court entered on this date.

(1061-110393)

B-1

APPENDIX B:

OPINION OF THE UNITED STATES COURT

OF APPEALS FOR THE SEVENTH CIRCUIT,

DATED AND FILED APRIL 27, 2001

In the

United States Court of Appeals

for the Seventh Circuit

No. 00-2737

AAR INTERNATIONAL, INCORPORATED,

Plaintiff-Appellant,

V.

Nimelias Enterprises S.A., Vacances Heliades S.A. and

Princess Airlines S.A.,

Defendants-Appellees.

Appeal from the United States District Court for the Northern

District of Illinois, Eastern Division.

No. 99 C 8090—Elaine E. Bucklo, J udge

ARGUED DECEMBER 7, 2000—DECIDED APRIL 27, 2001

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Before BAUER, MANION, and ROVNER, Circuit Judges.

BAUER, Circuit Judge. AAR International, Inc. (“AAR”)

appeals from the decision of the district court granting the

appellees’ motion to abstain, stay and/or dismiss proceedings

which AAR had brought against Vacances Heliades S.A.

(“VH’’). AAR also asks us to remand the case to the district

court with instructions to deny VH’s alternative motion to

dismiss the action on grounds of forum non conveniens. For

the reasons set forth below, we reverse and remand.

BACKGROUND

AAR leased a Boeing 737-3Q8 aircraft to VH for a term

of 96 months pursuant to an Aircraft Lease Agreement in May

of 1998. Shortly thereafter, VH subleased the plane to

Nimelias Enterprises S.A., who in tur sub-subleased it to

Princess Airlines. VH and Nimelias have assigned to AAR

their rights under the sublease and subsublease, respectively.

On November 23, 1998, AAR contracted to sell its rights in

the plane, the lease, the sublease, and the subsublease to First

Security Bank as owner trustee for the benefit of TA Air X

Corp. However, on October 28, 1999, First Security Bank

and TA Air X Corp. assigned and transferred back all such

nights to AAR.

On August 23, 1999, First Security’ provided defendants

with written notice asserting that they were in default of their

obligations under the various lease and sublease agreements

in several respects. Specifically, AAR claimed that the

defendants had violated the lease by: (1) permitting

delinquent EuroControl charges of approximately Euro

1

AAR claims that it sent this notice together with First Security, but

VH claims that First Security sent it with a carbon copy to TA Air but that

the notice “on its face does not appear to have been communicated to

AAR.” However, VH does state that the later notice of termination of

lease was sent by First Security and signed by a representative of AAR.

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700,000 to accrue on the plane;’ (2) failing to keep the plane

in serviceable condition by allowing an engine to be taken

off-wing and to remain unserviceable for over one year and

by failing to take required steps to enable the engine to be

repaired and maintained; and (3) failing to pay variable rent

under the lease for July, 1999. As a further response to these

alleged acts of default, AAR and First National provided the

defendants with written notice of termination of the lease on

September 7, 1999.

VH claims that AAR failed to fulfill some of its

obligations under the lease before it sent notice of the

defendants’ alleged default, and that at least one of the actions

that AAR characterizes as an act of default was caused by

AAR’s prior breach. Specifically, AAR notes that the lease

obliged AAR to deliver the plane “fresh from a Boeing

Maintenance Planning Document C-7 check (overhaul) with

all CPCP tasks current and completed.” VH claims that the

C-7 overhaul inspection “makes the [a]ircraft airworthy for at

least 8,000 flight hours.” However, VH claims that the

* BuroControl is the European Organization for the Safety of Air

Navigation. AAR claims that, by November 4, 1999, EuroControl had

asserted a lien against the plane to secure unpaid EuroControl route

charges plus interest in the amount of Euro 1,284,606,22 and had sued

Princess to recover this amount. AAR also asserts that it paid EuroControl

in order to recover possession of the plane, to discharge the lien, and to

terminate litigation over the lien, and that the defendants have refused to

reimburse AAR for the payment.

7 This contention is hotly disputed by AAR, which notes that the lease

expressly provides that the plane was leased in an “as is” condition and that VH

bore the risk of any mechanical problems with the plane, including the engine.

\

B-4

plane’s engines began to develop technical problems after

about 3,500 flight hours, and that a subsequent maintenance

check revealed that one of them was in need of immediate and

extensive repairs. VH asserts that it needed certain maintenance

records to perform the required repairs, including video

boroscopes of the engine which the lease had required AAR to

perform before delivering the plane to VH. VH maintains that it

contacted TA Air (which was at that time the owner-participant

of the plane and of AAR’s rights under the lease) and requested

the maintenance records (including the boroscopes), but that the

records could not be found. VH claims that after investigating

the matter, it concluded that the boroscopes had not been

completed. VH claims that it was unable to repair the engine

without the required maintenance documents, and was

therefore forced to take the engine off-wing and to replace it

with a substitute engine, which it had leased from another

company at a cost of $700,000. According to VH, TA Air

consented in writing to the engine substitution on June 3, 1999.

VH sent the original engine to an Israeli company for repairs.

On October 1, 1999, less than one month after First Security

and AAR had sent the defendants its notice of termination of the

lease, VH filed a complaint before the One Member First

Instance Court of Athens, Greece against “AAR Coprp.,”

(AAR’s parent company, which AAR insists is a wholly

separate legal entity from AAR), Transamerica Equipment

Financial Services, and TA Air. VH alleged that AAR and

TA Air had breached the lease and caused VH damages by

failing to perform required maintenance and by failing to

provide VH with the information necessary to repair the

engine. VH asserted that the defendants’ termination of the

lease was “invalid, improper and fraudulent” because: (1) it

came from the owner trustee of the aircraft (First Security)

rather than from the owner-participant (TA Air); and (2) it

was “supported on non-existent and unfounded grounds,

which have been created by those who have made the

termination.” (That is, VH claimed that AAR and TA Air were

themselves keeping the engine off-wing, and therefore keeping

————<— lll C——s—OSSS“itsON

B-5

the plane out of serviceable condition, by refusing to turn over

the records needed to make the repairs.) The complaint sought

the arrest of AAR’s assets in Greece (including the plane)’ as

security for VH’s damage claims, an order prohibiting the

deregistration and departure of the aircraft from Greece, and

the maintenance of the status quo until a hearing on the merits

of VH’s damage claims.

On October 8, 1999 AAR Corp. and TA Air filed

handwritten responses with the Greek court. AAR Corp.

denied that the arrest of its assets and of the aircraft was

necessary, arguing that it was a publicly traded corporation

with significant assets, and that therefore VH was exposed to

no financial risk. AAR Corp. also argued that it should be

free of any legal liability because AAR’s rights in the lease

were assigned to TA Air at the time that the engine failure

occurred, and because the contract expressly provided that the

plane was leased “as is” with no warranty. On October 11,

1999 the Athens court issued a brief handwritten provisional

order prohibiting the deregistration and departure of the plane

pending a subsequent hearing, which was set for November

11, 1999. At the November 11 hearing, counsel for the

parties appeared and presented arguments. AAR claims that

during the hearing, its local counsel orally argued that AAR

was a separate entity from AAR Corp., that only the former

was a party to the lease, and that VH had therefore named the

wrong party in its complaint. On November 15, 1999, the

court reaffirmed and extended the October 11th provisional

order pending a final decision cn the merits. On November

15, TA Air filed a written objection to the November 11

order, in which it argued that AAR, Corp. and AAR

International, Inc. were separate entities. On October 28,

1999 TA Air transferred back its interest in the plane and the

lease to AAR.

‘ VH claims that it sought the arrest of AAR’s assets in Greece and of

the aircraft as security for its claims for damages stemming from AAR’s

alleged breach of the Lease. AAR disputes this characterization.

B-6

On November 22, VH filed a second action against

“AAR, International Inc. Corp.” and TA Air in the Multi

Member First Instance Court in Athens (the “second Athens

action”). This time, VH sought substantial damages for costs

arising out of the failure of the onginal engine. Specifically,

VH ciaimed $3.9 million to cover the cost of leasing a

replacement engine, plus approximately $200,000 to cover

late fees and a lost security deposit in connection with that

leasing. VH’s theory of recovery in the second Athens action

was that AAR breached the lease by failing to perform the

required video boroscopes on the engine before delivery, by

failing to deliver the engine in working condition for 8,000

flight hours, and by failing to provide VH with the

maintenance records necessary to repair the original engine.

The damages sought covered the period from the filing of the

first action on October 1, 1999 to the date of the filing of the

second action. The Greek court set a court date for December

14, 2000. The parties dispute what was to occur on this date;

VH claims that the case was “set for trial” on that date, while

AAR contends (through the affidavit of its Greek attorney)

that the December 14 date was for a preliminary hearing only,

that no witness examination or discovery was scheduled to

occur until after that date, and that no tnal would likely occur

for several years.

On December 13, AAR filed suit against VH, Nimelias,

and Princess (the “appellees”) in the Northern District of

Illinois, seeking damages for the defendants’ breach of the

lease. The asserted grounds for the suit were identical to

those stated in the written notice of default (namely, that the

appellees had allowed the engine to go off-wing, that they had

allowed EuroControl liens to accrue, and that they had failed

to pay variable rent on the plane for July, 1999.) The

complaint asserted that these acts of default justified AAR in

terminating the lease in September, 1999. AAR sought

damages in excess of $21 million to cover costs of returning

the plane or of any engine to the United States, and of

restoring the plane to airworthy condition. AAR also sought

)

ee a ee ee ee ee eee ee ee eee

B-7

reimbursement for the EuroControl charges that it claimed it

was forced to pay on Princess’ behalf.

On January 25, 2000 the Athens court issued a written

decision in the first Athens action under the title “Provisory

Measures Procedure.” After concluding that Greek law

applied to the action, the court found several facts to be

“probable” in light of its consideration of witness testimony,

oral arguments, documents, and written submissions

presented by the partics during the November 11 hearing. For

example, the court found it probable that AAR Corp. and

AAR are the same legal person, and that AAR Corp. failed to

deliver- the aircraft with its engines properly maintained,

forcing VH to lease a replacement engine in order to continue

operating the aircraft, thereby incurring expenses of

221,000.000 Greek Drachmae. The court also found that the

aircraft appeared to be AAR Corp.’s “sole negotiable asset,”

and that the situation regarding AAR Corp.’s assets was

“doubtful, creating a financial risk for [VH] as per the

Satisfaction of its requirements.” The court then held that

these provisional findings supported VH’s requested “safety

measure of conservatory seizure for 221,000 Grd against

[AAR Corp.]” plus an additional 29,000 Grd in interest and

fees. The court then ordered “the conservatory seizure of any

movable or real estate of [AAR Corp.]” and of the aircraft “in

order to ensure [VH]’s claim against [it] . . . up to the amount

of 250,000 Grd.” The court also expressly allowed AAR

Corp. to cancel (or if the seizure had already been enforced, to

replace) the seizure by providing the Court’s Secretarial

Service with a bank guarantee in the form of an irrevocable

line of credit in the same amount from a creditable bank

operating in Greece.’

The parties provide differing characterizations of the

purpose and effect of the first Athens action. VH describes

* The court also found that VH’s claims against the other defendants

(Transamerica and TA Air) “do not appear to be proven.”

B-8

the first Athens action as an emergency action seeking the

seizure (or arrest) of the aircraft to guarantee that there would

be assets available to satisfy a judgment that VH may obtain

against AAR, and seeking an assessment of those damages.

VH asserts that the “findings” made by the Athens court on

January 25 are not provisional, and in support of this

proposition it provides an affidavit of its Greek attorney which

States that it is extremely rare where the Multimember First

Instance Court of Athens will overturn the findings of the

Emergency Court. Conversely, AAR presents the testimony of

its own Greek attorney, who states by affidavit that under

applicable Greek law and procedure, the First Athens action

was provisional in nature, and nothing adjudicated therein

constitutes a finding of fact or law for any purpose. Further,

he asserts that the order entered by the Athens court on October

11, 1999 was meant only to protect the status quo ante until

hearing on the petition, and that the November 11 order

likewise only maintained in effect the prior order pending a

judgment. Furthermore, AAR’s Greek lawyer states that the

Greek court did not need to have personal jurisdiction over any

of the defendants in order to issue such provisional relief, and

that no ruling in the first Athens action operates as a finding that

the Athens court has jurisdiction over the defendants or that such

defendants have been formally served with process (other than

by telegram). Finally, he asserts that the January 25, 2000 order

in the first Athens action constituted only a temporary arrest (or

attachment) of the aircraft and a provisional order prohibiting the

deregistration and departure of the Aircraft pending the final

resolution of VH’s claims.

Subsequently, VH instituted two additional related actions

in the Greek courts. After AAR posted the bank guarantee and

attempted to remove the plane from Greece on February 4,

2000, VH filed another emergency proceeding (the “third

Athens action”). Like the first action, this action sought the

immediate seizure of the aircraft as well as a prohibition

against the deregistration and departure of the plane until a

final and unappealable decision is issued (and in any case

B-9

until the engine is repaired). It also sought the attachment of

all of “AAR International Corp.”’s assets in Greece, and a

provisional order prohibiting the deregistration or take-off of

the aircraft, as well as any other action which might change

the actual and legal status of the plane and or any other assets

of the defendant. The purpose of this action was to secure

potential recovery under the second Athens action, that is, it

was a request for temporary relief pending the outcome of that

action in order to ensure that “AAR International Corp.” had

sufficient assets available to cover any potential damages

awarded against it in the second action.

On February 7, 2000, the Athens Court granted VH the

relief it sought in the third action, and again ordered the

seizure of the aircraft and provisionally prohibited its

deregistration or departure. Once again, the court provided

that the plane would be allowed to be deregistered and

removed from Greece if AAR posted a bank guarantee in the

amount of 250,000 Grd. AAR posted the bank guarantee

Shortly thereafter, and removed the plane from Greece. In

addition, VH filed a fourth action in Athens, which it

describes as a continuation or renewal of the first Athens

action. WH claims that, under Greek law, it was obliged to

file the fourth, “non-emergency” action in order to recover

any damages from AAR and to maintain in force all of the

orders and decisions given according to the emergency

procedure. VH asserts that the fourth Athens action is

“exactly the same case” as the first Athens action, except that

it is filed according to “ordinary” or “non-emergency”

procedures.

In the federal action, the appellees moved the district

court to abstain under the Colorado River doctrine in light of

the pending Greek actions, or in the alternative, to dismiss the

action on grounds of forum non conveniens. Finding that the

American action was parallel to the ongoing Greek litigation

and that the Colorado River factors favored abstention, the

district court granted the appellees’ motion to abstain. The

B-10

court did not address the forum non conveniens issue. AAR

appealed.

DISCUSSION

A) Abstention

Federal courts have a “virtually unflagging obligation” to

exercise the jurisdiction conferred on them by Congress.

Colorado River Water Cons. Dist. v. United States, 424 US.

800, 817(1976). Nevertheless, in “exceptional” circumstances, a

federal court may abstain from hearing a suit and “await the

outcome of parallel proceedings as a matter of ‘wise judicial

administration, giving regard to the conservation of judicial

resources and comprehensive disposition of litigation.’” Finova

Capital Corp. v. Ryan Helicopters U.S.A., Inc., 180 F.3d 896,

898 (7th Cir. 1999) (quoting Colorado River, 424 US. at

817). However, because the federal courts have a “heavy

obligation” to exercise jurisdiction, “only the clearest of

justifications will warrant dismissal” of the federal action in

deference to a concurrent state proceeding in the name of wise

judicial administration Colorado River, 424 U.S. at 819, 820.

Therefore, our task in determining whether abstention is

appropriate is “not to find some substantial reason for the

exercise of federal jurisdiction by the district court, . . . [but] rather

. . . to ascertain whether there exist ‘exceptional’ circumstances,

the ‘clearest of justifications,’ that can suffice under Colorado

River to justify the surrender of that jurisdiction.” Moses H.

Cone Mem’! Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 25-

26 (1983). We review a district court’s decision to abstain

under Colorado River for abuse of discretion. See Finova,

180 F.3d at 898. However, to avoid reversal, a district court

must exercise its discretion under the standards prescribed by

Colorado River. That is, it must consider the factors listed in

Colorado River and its progeny and determine whether in

light of those factors exceptional circumstances exist

warranting abstention. See Moses H. Cone Mem'l Hosp., 460

U.S. at 19. If there is any substantial doubt that the parallel

B-11

litigation will be “an adequate vehicle for the complete and

prompt resolution of the issues between the parties,” it would be

a “serious abuse of discretion” for the district court to stay or

dismiss a case in deference to the parallel litigation. Jd. at 28.

Moreover, while the situation confronting a court on a motion to

abstain “is somewhat different where, as here, the alternate forum is

not the tribunal of a state of the federal union to which, under our

Constitution, we owe a special obligation of comity,” we apply the

same general principles with respect to parallel proceedings in a

foreign court in the interests of international comity. Finova, 180

F.3d at 898 (citing Ingersoll Milling Mach. Co. v. Granger, 833

F.2d 680, 685 (7th Cir. 1987) (internal quotation omitted)).

In evaluating the propriety of the district court’s decision to

abstain under Colorado River, we must first determine whether

the federal and foreign proceedings are parallel. See Finova, 180

F.3d at 898 (citing Caminiti & lIatarola, Lid v. Behnke

Warehousing, Inc., 962 F.2d 698 (7th Cir. 1992)). This is a legal

issue which we review de novo. See Property & Cas. Ins. Lid. v.

Central Nat'l Ins. Co. of Omaha, 936 F.2d 319, 321 (7th Cir. 1991)

(citations omitted); Ryan v. Johnson, 115 F.3d 193, 196 (3d Cir.

1997) (citation omitted). If the actions are not parallel, the

Colorado River doctrine does not apply. See Interstate Material

Corp. v. City of Chicago, 847 F.2d 1285, 1287 (7th Cir. 1988).

Suits are parallel if “substantially the same parties are litigating

substantially the same issues simultaneously in two fora.”

Schneider Nat’! Carriers, Inc. v. Carr, 903 F.2d 1154, 1156 (7th

Cir. 1990). Suits need not be identical to be parallel, see Caminiti,

962 F.2d at 700, and the mere presence of additional parties or

issues in one of the cases will not necessarily preclude a finding that

they are parallel. See id. at 701; Lumen Constr., Inc. v. Brant

Constr. Co., Inc., 780 F.2d 691, 695 (7th Cir. 1985). The question

is not whether the suits are formally symmetrical, but whether there

is a “substantial likelihood” that the foreign litigation “will dispose

of all claims presented in the federal case.” Day v. Union Mines

Inc., 862 F.2d 652, 656 (7th Cir. 1988) (quoting Luznen, 780 F.2d at

695).

B-12

The district court found that the federal action and the

Greek actions were parallel. The court reasoned that:

[t}]here is a substantial likelihood that [the Greek]

cases will dispose of all the issues in the federal

litigation because a single member of the Greek

court, which normally sits as a panel of three, has

found on an emergency hearing that AAR is liable

to the defendants here (overlapping with some of

the plaintiffs there) and has ruled in a preliminary

way on damages.

The court also found that AAR had offered “no plausible

reason to think that this ruling will be reversed by the full

panel,” and stated that “if there will be anything more to

litigate in this matter than liability and damages, AAR does

not explain what it is.” Finally, the district court concluded

that if the ruling of the Greek judge is upheld, “that would

probably end the matter,” because the ruling would be entitled

to recognition and would have preclusive effects over the

claims brought in the federal action.

AAR challenges the district court’s finding on several

grounds,° but we can resolve the matter by addressing only

one. AAR maintains that the claims that it brought in the

federal case are distinct from and independent of the claims

brought in the second Athens action, and that therefore it is

unlikely that the second Athens action will dispose of them.

In support of this argument, AAR points to section 1E of the

lease, which provides in relevant part:

Lessee will pay all Base Rental, Variable Rental,

Supplemental Rental, costs, charges, fees and

expenses in connection with the use, possession and

operation of the Aircraft, including mainienance,

For example, AAR argues that it was not a party to any of the Greek

actions, and that therefore those actions are not parallel to the federal

action. While we do not decide the issue, we assume throughout the

opinion that AAR was a party to the Greek litigation.

B-13

insurance, state, local, provincial and all other taxes,

and risk of loss or other casualty. Such obligations

of Lessee will be paid in full and will be absolute

and unconditional under any and all circumstances

and regardless of other events, including any of the

following: (a) Any right of set-off, counterclaim,

recoupment, defense or other right (including any

right of reimbursement) which Lessee may have

against Lessor . . . including any claim Lessee may

have for the foregoing. (b) Unavailability or

interruption in the use of the Aircraft for any reason,

including ... any defect in airworthiness.

merchantability, fitness for any purpose, fitness,

design . . . . (d) Invalidity or unenforceability . . . or

other defect in this Lease. (e) Failure or delay on the

part of any party to perform its obligations under

this Lease. (f) Other cause which but for this

provision would or might have the effect of

terminating or in any other way affecting any

obligation of Lessee hereunder.

AAR urges that, according to this provision of the lease, the

appellees’ obligation to pay rent, to keep the aircraft in

operational condition, and to discharge any liens against the

aircraft--which is the focus of the federal claim--is absolute

and unconditional, and is not subject to any claims and

defenses that VH may have against AAR. AAR notes that

VH’s obligations under this provision were not and are not at

issue in any of the Greek actions, and that therefore no ruling

in those actions could have preclusive effect over AAR’s

claims in the federal action. Therefore, AAR argues that even

if the Athens court has ruled in a preliminary fashion that

AAR is liable to VH for damages resulting from the failure of

the engine, it has not ruled that this breach by AAR excused

the defendants from their independent duties. Indeed, AAR

maintains that any such finding would flatly contradict the

terms of section 1E of the lease.

B-14

We agree with AAR. On the facts presented, it does not

seem substantially likely that the Greek actions will dispose

of all of the claims presented in the federal suit. It is quite

possible that AAR’s claim that the appellees breached the

lease by taking the engine off-wing will be disposed of in the

Greek action, as such a claim would be precluded by a final

judgment by the Greek court that AAR breached the contract

and forced VH to remove the engine when it leased the

aircraft with a defective engine.’ However, AAR’s other

claims are not currently before the Greek courts in any of the

Greek actions, and it does not seem likely that any of the

Greek courts will resolve the legal and factual issues

supporting those claims in deciding the claims actually before

them. The only lease-based defense that AAR has put forward

in any of the Greek actions is that under a separate section of

the lease, the aircraft was leased on an “as is” basis with no

warranties of any kind. It has not injected the issue of the

interpretation of section-1E into any of the Greek litigation by

way of either a defense or a counterclaim. Nor has AAR

alleged in any of the Greek actions that the appellees failed to

pay rent or to discharge any liens, or that the appellees had a

duty to pay such expenses irrespective of any alleged breach

on AAR’s part. Neither AAR nor any of the appellees have

sought a declaration of their rights under section 1E in any of

the Greek actions. Therefore, even if the provisional rulings in

the first and third Athens actions are upheld on appeal and

VH prevails in the second Athens action as well, the

appellees’ obligations and potential liability under section 1E

of the lease for failing to pay rent and to keep the aircraft free

of liens will not have been decided. While we do not decide

the issue and interpret section 1E, we cannot find AAR’s

argument that section 1E makes the appellees’ duty to pay

rent and to discharge liens absolute irrespective of any breach

by AAR implausible as a matter of law. Given this, we cannot

” Even this is uncertain, however. Because, if AAR prevails in the

Greek actions, its claims against the appellees will not be resolved.

B-15

say that it is substantially likely that the issue will be disposed

of in the Greek litigation. Because “it would be a serious

abuse of discretion” to abstain under Colorado River if “there

is any substantial doubt” “that the parallel . . . litigation will

be an adequate vehicle for the complete . . . resolution of the

issues between the parties,” Moses H. Cone Mem’! Hosp., 460

U.S. at 28, and because any doubt regarding the parallel

nature of the foreign suit should be resolved in favor of

exercising jurisdiction, see Allen v. Board of Educ., Unified

Sch. Dist. 436, 68 F.3d 401, 403 (10th Cir. 1995), we

conclude that the federal and foreign actions are not parallel.

None of this is meant to signal a retreat from our holding in

Day. In that case, we found that a claim brought in federal court

by a group of former shareholders against the purchasers of

their stock was parallel for Colorado River purposes to a

pending state court action involving essentially the same

parties, where the federal action turned on the interpretation

of the payment provision of the stock pvrchase agreement

which was the subject of the state litigation. Day v. Union

Mines, Inc., 862 F.2d 652, 655-57 (7th Cir. 1988). We found

the federal and state suits to be parallel even though the

particular issue presented in the federal claim--the interpretation

of the payment provision of the stock purchase agreement--was

not specifically raised in the state court proceeding. In the state

action, the purchasers of the stock had claimed that the

shareholders breached certain representations and warranties,

thereby relieving the purchasers of their obligations under the

stock purchase agreement. The state action therefore addressed

the validity, enforceability, and interpretation of the entire stock

purchase agreement, of which the payment provision was a part.

Under these circumstances, we agreed with the district court’s

conclusion that the issue presented in the federal claim would be

disposed of in the state litigation, regardless of which party

prevailed in the state case. See id. at 656. We reasoned that if the

purchasers won the state case, then the purchase agreement

would be declared invalid in toto, and the shareholders would be

left unable to enforce its payment provision against the

B-16

purchasers. We further surmised that if the shareholders won

the state case, then this would constitute a finding by the state

court that they were entitled to payment, and the state court

would almost inevitably have to interpret the payment

provision in order to determine the amount of payment that

they could collect. Given this, we concluded that the issue

presented in the federal action was premature, since it could

not be resolved until the issue presented in the state action

(the validity of the stock purchase agreement) was decided.

Therefore, we found that the federal and state actions were

parallel, and we ruled that “where the validity, enforceability

and interpretation of a contract are at issue in both federal and

state courts, and the state litigation was commenced first and

has progressed substantially towards completion, entry of a

stay does not under Colorado River constitute an abuse of

discretion.” Id.

We find this case to be distinguishable from Day. VH has

not argued in any of the Greek actions that AAR’s claimed

breach invalidated the lease or excused VH from its lease

obligations to pay rent and discharge liens against the aircraft.

Rather, it seeks to hold AAR liable for breaching certain

claimed warranties which would not necessarily implicate its

own obligations under section 1E of the lease. Therefore, it is

possible that VH could prevail in the Greek action without

defeating all of AAR’s claims in the federal action. In addition,

it is not necessarily the case that the issue presented by VH in

the foreign action must be resolved before the district court can

rule on the claim presented in the federal action. While actions

filed in separate fora alleging breaches of different provisions

of the same contract may frequently be deemed parallel for

Colorado River purposes, see generally Evans Transp. Co. v.

Scullin Steel Co., 693 F.2d 715 (7th Cir. 1982); Microsoftware

Computer Sys., Inc. v. Ontel Corp., 686 F.2d 531 (7th Cir.

1982) (overruled on other grounds by Gulfstream Aerospace

Corp. v. Mayacamas Corp., 485 U.S. 271 (1988)); Darsie v.

Avia Group Int’l, Inc., 36 F.3d 743 (8th Cir. 1994); Manley,

Inc. v. Keystone Food Prods., Inc., 859 F.2d 80 (8th Cir.

B-17

1988), the presence of section 1E of the lease prevents us

from drawing such a conclusion here.

Citing Channell v. Citicorp Nat’! Services, Inc., 89 F.3d

379 (7th Cir. 1996), the appellees seem to argue that the

Greek actions are parallel to the federal action because the

claim brought by AAR in the federal action arises from the

same “operative facts” as the claims brought in Greece, and

therefore should have been pled as a compulsory counterclaim

in the Greek actions. However, Channell addressed the scope

of a district court’s authority under 28 U.S.C. § 1367 to

exercise supplemental jurisdiction over claims that form part

of the same “case or controversy” under Article III of the

Constitution, and not the standards for determining whether

actions are parallel for purposes of Colorado River abstention.

Channell is therefore inapplicable here. Moreover, in

concluding that an automobile lessor’s counterclaim seeking

contractual termination payments against lessees who had

brought an action for violation of the Consumer Leasing Act

was sufficiently connected to the lessees’ claims (under §

1367’s liberal standards) to allow the court to assert

jurisdiction over the counterclaims, we were careful in

Channell to note that the lessees’ claims and the lessor’s

counterclaims were based on the same clause of the lease, and

that the basic issues were integral to the lessees’ case even

before the counterclaim was brought. See id. at 385-86. As

has been noted, AAR’s federal claim does not bear a similar

relationship to the Greek claims.

Nevertheless, it could be argued that a claim brought in a

federal action based on a claim which would be a compulsory

counterclaim in a pending foreign action might make the

federal action “parallel” to the foreign action, because the

federal claim would be “disposed of” in the foreign action in

one way or another. (That is, it would either be asserted as a

counterclaim in the foreign action and decided there, or lost if

not asserted before the conclusion of the foreign action. Either

way, conclusion of the foreign litigation would leave nothing

left for the federal court to decide.) However, the appellees

B-18

point to no authority (nor have we found any) suggesting that

a federal action is parallel to a state or foreign action for

Colorado River abstention purposes when the claim upon

which the federal action is based is pleadable as a compulsory

counterclaim in the other action. Moreover, it is unclear that

Greece has a compulsory counterclaim rule analogous to FED.

R. CIv. P. 13(a). VH submitted the affidavit of its Greek

lawyer, which states that Greek law provides for the filing of

counterclaims either in the original action or in a separate

procedure, and that “if a party choose [sic] the way of

separate procedure,” then the Greek court has the power to

unify the claim with the original procedure. Moreover, the

affidavit states that “claims not asserted in any of the current

proceedings or not presented on time even in a separate

procedure (which will be unified with the existing procedures

as . . . mentioned above[)] . . . or before the current

proceedings are concluded, will be lost.”* From the affidavit,

it is not clear whether a Greek court’s “unifying” of

counterclaims brought in separate proceedings with the

original proceeding is mandatory or discretionary. Thus it is

not clear that counterclaims neither filed in the original action

nor unified with that action before the decision is reached will

be “lost.”

In addition, even if we were to conclude that either of the

Greek actions were parallel to the federal action, we would

not affirm the district court’s decision to abstain in this case.

Once a district court determines that the federal action and the

foreign action are parallel, its next task is “to balance the

considerations that weigh in favor of, and against, abstention,

bearing in mind the exceptional nature of the measure.”

Finova, 180 F.3d at 898. One of the ten factors that the court

must consider is the relative inconvenience of the federal

forum. See id. In considering this factor, the district court

placed undue weight on the inconvenience of the federal

AAR’s Greek lawyer submitted an affidavit denying that Greece has

a compulsory counterclaim rule.

O_O

B-19

forum for the appellees, and did not adequately consider the

inconvenience of the Greek forum for AAR. The court took

judicial notice that the law firm representing AAR “advertises

itself as a global law firm . . . and is presumably able to

litigate even in Athens.” Putting aside the district court’s

rather unorthodox use of judicial notice, we find that the court

erred in considering the law firm’s ability to litigate in Athens

as part of the “convenience” calculus. The proper inquiry is

the relative inconvenience of the competing fora to the

parties, not to their lawyers. Moreover, the district court did

not even consider section 20B of the Lease, which provides

that the appellees “irrevocably consent” to non-exclusive

jurisdiction in Illinois and “irrevocably waive any claim that

any such suit, action or proceeding brought in any court in or

of the State of Illinois has been brought in an inconvenient

forum.” While we reject AAR’s argument that section 20B

bars VH’s entire abstention claim (because an abstention

motion is not the same as an objection to venue on grounds of

inconvenience, and inconvenience to the parties is only one of

the many factors that a district court weighs in deciding

whether to abstain), we do find that this provision of the lease

is relevant to the convenience analysis and should have been

weighed by the court. The court should have determined

whether section 20B precluded the defendants from objecting

to the inconvenience of venue in Illinois altogether, therefore

ceding the inconvenience factor of the abstention analysis to

AAR. At the very least, this error would require us to remand

to the district court for reconsideration, even if we found the

Greek and the federal litigation parallel.

B) Forum non conveniens

AAR also asks us to remand this case to the district court

with instructions to deny VH’s motion to dismiss the federal

action on grounds of forum non conveniens. The appellees

brought their forum non conveniens motion before the district

court as an alternative to their abstention motion, but the

district court did not address it, presumably deeming it

mooted by its decision to abstain the action. AAR now asks us

B-20

to decide the merits of the motion in its favor. The appellees

object that because the district court did not rule on this

matter, there is nothing for us to review.

As a general rule, an appellate court may not consider an

issue not passed on below. See Singleton v. Wulff, 428 U.S.

106, 120 (1976). However, this rule is subject to certain

limited exceptions. For example, an appellate court may

resolve an issue not decided by the district court where “the

proper resolution [of that issue] is beyond any doubt.” See id.

at 121 (citing Turner v. City of Memphis, 369 U.S. 350

(1962)). “The matter of what questions may be taken up and

resolved for the first time on appeal is one left primarily to the

discretion of the courts of appeals, to be exercised on the facts

of individual cases.” Singleton, 428 U.S. at 120. In exercising

this discretion, we have resolved issues which were not

resolved below where, inter alia, “both parties have briefed

and argued [the issue’s] merits,” and where “the benefit of a

district court hearing is minimal because proper resolution of

the issue is clear.” United States v. Brown, 739 F.2d 1136,

1145 (7th Cir. 1984). See also Otto v. Variable Annuity Life

Ins. Co., 814 F.2d 1127, 1137-38 (7th Cir. 1986) (deciding a

summary judgment motion raised below but not reached by

the district court “in the interests of judicial economy,” where

the parties had a “full and fair opportunity to argue all

relevant aspects of the . . . issue” before both the district and

the appellate courts, and where the correct resolution of the

issue was Clear).

AAR argues that the proper resolution of this issue is

beyond any doubt (therefore making it a candidate for

resolution on appeal) because section 20B of the lease

provides that the appellees irrevocably consent to the non-

exclusive jurisdiction of the Illinois federal and state courts,

and irrevocably waive any objection to the venue of any

action brought in Illinois as well as any objection that any

such action has been brought in an inconvenient forum. AAR

notes that we have held that when parties freely negotiate a

forum selection clause, the clause is to be enforced in

B-21

accordance with its terms except in exceptional circumstances,

see Bonny v. Society of Lloyd’s, 3 F.3d 156, 159-61 (7th Cir.

1993), and that the appellees have identified no such

circumstances here. The appellees counter that, while they do

not dispute the enforceabilty of section 20B’s forum-selection

clause, such clauses are not dispositive of a court’s decision to

grant or deny a motion to dismiss based on forum non

conveniens. Citing Comedy Partners v. Street Players Holding

Corp., 34 F. Supp. 2d 194, 197 (S.D.N.Y. 1999) and Finova, the

appellees contend that courts entertaining such motions may

properly weigh concerns such as systematic integrity, judicial

economy and comity, and are not bound by any agreement

between the parties not to object to venue on grounds of

inconvenience. Moreover, the appellees note that the forum

selection clause at issue in this case provides for concurrent,

non-exclusive jurisdiction in Illinois state and federal courts, and

therefore by its terms does not purport to make Illinois the

mandatory or exclusive forum for adjudicating disputes over the

contract. Therefore, even if the existence of a mandatory forum

selection clause were wholly dispositive of the issue (which the

appellees deny), this rule would be of no help to AAR.

Before we can determine whether the resolution of this

issue is sufficiently clear to permit us to decide it instead of

remanding it, we need to determine what legal standards

govern a court’s analysis of a motion to dismiss on forum non

conveniens grounds when the parties have agreed to a forum

selection clause like the one in this case. The usual forum non

conveniens analysis (that is, the analysis applicable to cases not

involving forum selection clauses) consists of a two-step

inquiry. The court must first determine that an adequate

alternative forum is available to hear the case, meaning that all

parties are within the jurisdiction of the alternative forum and

amenable to process there, and that the parties would not be

treated unfairly or deprived of all remedies if the case were

litigated in the alternative forum. See Kamel v. Hill-Rom Co.,

Inc., 108 F.3d 799, 802-03 (7th Cir. 1997). If the court finds

that such an adequate alternative forum exists, then the court

B-22

must proceed to weigh a host of private interest factors (for

example, the “relative ease of access to sources of proof” in

each forum, and “the availability of compulsory process for

the attendance of unwilling witnesses”), and public interest

factors (for example, “administrative difficulties stemming

from court congestion,” and the interest of trying a diversity

case in a forum that is “at home with the law that must govern

the action.”) Id. at 803. Moreover, under the usual analysis,

there is “a strong presumption in favor of the plaintiff's

choice of forum, which may be overcome only when the

private and public interest factors clearly point towards trial in

the alternative forum.” See Macedo v. Boeing Co., 693 F.2d

683, 688 (7th Cir. 1982) (citations omitted), and this is

particularly true where a domestic plaintiff has filed suit in his

own home forum. See id.; see also Kamel, 108 F.3d at 803.

However, some of our sister circuits have suggested that

where the parties to an international dispute have agreed to a

mandatory forum selection clause, the usual forum non

conveniens analysis no longer applies, and the only question

remaining for the district court to determine is whether the

forum selection clause is enforceable under the standards set

forth in Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972).

See Evolution Online Sys., Inc. v. Koninklijke PTT Nederland

N.V., 145 F.3d 505, 509-10 (2d Cir. 1998) (suggesting that a

district court should first apply the Bremen standards to

determine whether the forum selection clause was

enforceable, and should only reach the defendant’s motion to

dismiss on forum non conveniens grounds if it finds that the

parties did not form a contract containing a forum selection

clause); Cf. Mitsui & Co. (USA), Inc. v. Mira M/V, 111 F.3d

33, 37 (Sth Cir. 1997) (rejecting appellant’s challenge to the

enforcement of a mandatory forum selection clause for reasons

of forum non conveniens, and stating that “increased cost and

inconvenience are insufficient reasons to invalidate foreign

forum-selection or arbitration clauses.”); but see Royal Bed &

Spring Co., Inc. v. Famossul Industria e Comercio de Moveis

LTDA., 906 F.2d 45, 51 (1st Cir. 1990) (ruling that a forum

B-23

selection provision is not dispositive of a motion to dismiss

on forum non conveniens grounds, but rather is “simply one

of the factors that should be considered and balanced” in the

ordinary forum non conveniens analysis.) In Bremen, the

Court ruled that a freely negotiated mandatory forum

selection clause is enforceable unless the party challenging its

enforcement can “clearly show that enforcement would be

unreasonable and unjust, or that the clause was invalid for

such reasons as fraud or overreaching,” or that “trial in the

[chosen] forum will be so gravely difficult and inconvenient

that he will for all practical purposes be deprived of his day in

court.” Applying these standards together with standards

articulated in later Supreme Court cases, we have ruled that a

forum selection clause is presumptively valid and enforceable

unless (1) “[its] incorporation into the contract was the result

of fraud, undue influence, or overweening bargaining power;

(2) the selected forum is so gravely difficult and inconvenient

that [the complaining party] will for all practical purposes be

deprived of its day in court; or (3) [its] enforcement . . . would

contravene a strong public policy of the forum in which the

suit is brought, declared by statute or judicial decision.”

Bonny, 3 F.3d at 160 (internal citations and quotation

omitted).

Nevertheless, it can be argued that the Bremen and

Bonny standards should not control in this case, for as VH

notes, the forum selection clause in the Lease agreement is

permissive, not mandatory. (That is, it provides that suit may

be brought in Illinois as well as in other jurisdictions, but does

* We have also noted that “the only good reason for treating a forum

selection clause differently from any other contract . . . is the possibility of

adverse effects on third parties,” and have ruled that where that possibility

is slight, it should be treated like any other contract, Northwestern Nat'l.

Ins. Co. v. Donovan, 916 F.2d 372, 376 (7th Cir. 1990), and should

therefore be enforced “unless it is subject to any of the sorts of infirmity,

such as fraud and mistake, that justify a court’s refusing to enforce a

contract.” Id. at 375.

B-24

not mandate that suit must be brought exclusively in Illinois.)

At least one circuit has held that the traditional forum non

conveniens analysis (rather than the stricter scrutiny required

by Bremen) applies in cases involving permissive forum

selection clauses. See Blanco v. Banco Industrial de

Venezuela, S.A., 997 F.2d 974, 979-80 (2d Cir. 1993). This

conclusion seems reasonable. However, in this case we have

more than merely a permissive forum selection clause; we

have such a clause plus unambiguous language providing that

the lessee shall-not object to venue in an Illinois state or

federal court on the ground that such a court is an

inconvenient forum. We have held that by agreeing to a

mandatory forum selection agreement, a party waives

objections to venue in the chosen forum on the basis of cost or

inconvenience to itself. See Northwestern Int’l, 916 F.2d at

375, 378 (7th Cir. 1990). It would seem incongruous to

conclude that a party does not similarly waive such objections

when he agrees to a permissive forum selection clause which

specifically provides for the waiver of convenience-based

objections to suits brought in a particular venue. See generally

Blanco, 997 F.2d at 979 (deciding to apply the traditional

forum non conveniens analysis rather than the Bremen

standards where the forum selection clause at issue was

permissive and did not include either the defendant’s

irrevocable consent to suit in designated fora or the defendant’s

waiver of forum non conveniens objections). The forum

selection clause and the waiver provisions at issue here were part

of a lease that was freely negotiated between sophisticated

international corporations. Whatever inconvenience VH would

suffer by being forced to litigate in a court in [Illinois was

foreseeable at the time that it agreed to waive objections based

on such factors. See Bremen, 407 U.S. at 17-18. Under these

circumstances, we conclude that the stricter standards announced

in Bremen and Northwestern Int’l should control the analysis

of the appellees’ forum non conveniens motion.”

° The appellees rely on Comedy Partners for the proposition that a

B-25

Therefore, the appellees’ forum non conveniens motion

must fail unless they can demonstrate one of the three factors set

forth in Bonny. This they cannot do, because they have

effectively conceded the enforceability of the lease’s forum

selection clause. When confronted with AAR’s argument that

the forum selection clause and its waiver provisions should

control the disposition of its forum non conveniens motion, the

appellees argued only that cases like Bonny are inapposite, that

the forum selection clause was permissive rather than

mandatory, and that contractual agreements not to object to

venue on grounds of convenience are not dispositive of forum

non conveniens motions. Although AAR cited " ony and

argued that the appellees had not established that any of its

three factors were present in this case, the appellees merely

asserted that Bonny was inapplicable and did not argue in the

alternative that the forum selection clause and its waiver

provisions were unenforceable under Bonny. In effect, the

appellees have premised their entire argument regarding forum

non conveniens on the assumption that the standards set forth

in Bonny and Bremen do not control the forum non conveniens

inquiry in this case. We have rejected that assumption, and

unfortunately for the appellees, they have waived any

argument that the forum selection clause is unenforceable.

permissive forum selection clause containing irrevocable consent to suit in

a particular forum plus a waiver of forum non conveniens objections is not

“binding on the court” and is not dispositive of a forum non conveniens

motion. However, Comedy Partners did not involve a motion to dismiss

on grounds of forwn non conveniens. Rather, it involved a motion to

dismiss pursuant to the “first filed rule,” which is more analogous to an

abstention motion than a forum non conveniens motion. As we have noted,

a contractual agreement not to object to the inconvenience of a particular

venue is not dispositive of an abstention motion. Moreover, the statements

in Comedy Partners regarding the effect of a contractual agreement not to

object to venue upon a motion to dismiss the action in deference to an

earlier filed suit is dicta. The court actually held that the party challenging

the dismissal could not rely on the alleged contractual agreement not to

object to venue, because its substantive claim was premised on a denial

that the contract existed in the first place.

B-26

Therefore, since the forum non conveniens issue was

fully briefed by both of the parties on appeal, the resolution of

the issue is clear, and the dispositive issue (the enforceability

of the forum selection clause) is a question of law which we

review de novo, see Bonny, 3 F.3d at 159 (citations omitted),

we conclude that nothing would be gained by remanding this

issue to the district court for further consideration. See

Amcast Indus. Corp. v. Detrex Corp., 2 F.3d 746, 749-50 (7th

Cir. 1993); Bruneau v. FDIC, 981 F.2d 175, 178-79 (Sth Cir.

1992). Accordingly, we hold that appellee’s motion to dismiss

on grounds of forum non conveniens should be denied.

CONCLUSION

For the foregoing reasons, we REVERSE the district

court’s decision to abstain and REMAND with instructions to

vacate the dismissal order and to deny the appellees’ motion

to dismiss on grounds of forum non conveniens.

REVERSED and REMANDED.

A true Copy:

Teste:

Clerk of the United States Court of

Appeals for the Seventh Circuit

C-1

APPENDIX C:

JUDGMENT IN A CIVIL CASE OF THE UNITED

STATES DISTRICT COURT FOR THE NORTHERN

DISTRICT OF ILLINOIS, EASTERN DIVISION,

DATED AND FILED JUNE 13, 2000

United States District Court

Northern District of Illinois

Eastern Division

AAR International, Inc. JUDGMENT IN A CIVIL CASE

‘ Case Number: 99 C 8090

Vacances Heliades S.A.., et al.

C] Jury Verdict. This action came before the Court for

a trial by jury. The issues have been tried and the

jury rendered its verdict.

xe Decision by Court. This action came to heating

before the Court. The issues have been heard and a

decision has been rendered.

IT IS HEREBY ORDERED AND ADJUDGED | that

defendants’ motion to abstain and dismiss the case without

prejudice is granted.

Michael W. Dobbins, Clerk of Court

/s/ Matthew P. John

Matthew P. John, Deputy Clerk

Date: 6/13/2000

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D-1

APPENDIX D:

MEMORANDUM OPINION AND ORDER OF THE

UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS,

EASTERN DIVISION,

DATED AND FILED JUNE 13, 2000

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

AAR INTERNATIONAL, INC.,

Plaintiff,

v. ) No. 99 C 8090

VACANCES HELIADES S.A. )

NIMELIAS ENTERPRISES S.A., and )

PRINCESS AIRLINES S.A..,

Defendants.

)

MEMORANDUM OPINION AND ORDER

In 1998, AAR International (“AAR”) leased an airplane

to Vacances Heliades and Nimelias Enterprises (the

“defendants”).' A dispute arose about the satisfaction of the

parties’ obligations under the lease, and Vacances filed a

1

AAR International is an Illinois corporation with its principle place

of business in this state; Vacances Heliades is a French corporation with

its principal place of business in France, and Nimelias Enterprises, is a

Cypriot corporation with its principal place of business also in France.

D-2

lawsuit in the First Instance Court of Athens, Greece, against

AAR, Transamerica Equipment Financial Services and TA

Air X Corporation, alleging breach of the lease. On

November 22, 1999, Vacances filed a second case in Athens

seeking damages for the alleged breach. In addition, AAR’s

lawyer states that there is a third Athens action that he is

defending. On December 13, 1999, AAR filed this alienage

action I now consider in the Northern District of Illinois. The

defendants move that I abstain. I grant the motion and

dismiss the case without prejudice.

I.

I have a “virtually unflagging obli zation” to exercise the

jurisdiction conferred on me by Congress, but in exceptional

cases, I should stay or dismiss a suit and await the outcome of

parallei proceedings as a matter of “wise judicial

administration, giving regard to the conservation of judicial

resources and comprehensive disposition of litigation.”

Colorado River Water Conservation Dist. v. United States,

424 U.S. 800, 817 (1976) (internal citation omitted). Federal

courts usually grapple with abstention in the context of

parallel state court proceedings. Here, the alternate forum is

not the tribunal of “a state of the federal union to which,

under our Constitution, [I] owe a special obligation of

comity.” Ingersoll Milling Mach. Co. v. Granger, 833 F.2d

680, 685 (7th Cir. 1987). Nevertheless, in the interests of

international comity, I apply the same general principles with

respect to parallel proceedings in a foreign court. Finova

Capital Corp v. Ryan Helicopters U.S.A., Inc., 180 F.3d 896,

898 (7th Cir. 1999).

I first determine whether the federal and foreign

proceedings are parallel. Caminiti & latarola, Ltd. v. Behnke

Warehousing, Inc., 962 F.2d 698, 700 (7th Cir. 1992). They

are if substantially the same parties are litigating substantially

the same issues simultaneously in two fora. Schneider Nat'l

Carriers, Inc. v. Carr, 903 F.2d 1154, 1156 (7th Cir. 1990).

AAR argues that the plaintiff here is “ AAR International, “

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while the defendant in the first Athens action is “AAR Corp.”

and, in the second, “AAR International, Inc. Corp,” which,

AAR says, does not exist. The Greek court, however, found

that AAR Corp. and AAR International, Inc. are “one and the

same legal person,” Decision No. 762/2000, January 25,

2000. AAR asks me to hold that this ruling has “no

conceivable basis in law or fact.” “Concerns of international

comity” and “respect for the capacities of foreign .. .

tribunals,” Mitsubishi Motors v. Soler Chrysler-Plymouth,

473 U.S. 614, 629 (1985), would require me to reject this

claim, and even if they did not, the basis would be provided

by AAR’s own conduct before the Athens Court, defending

the first Athens action as AAR Corp. and arguing that it

should not have had to post a bank guarantee because it was

publicly traded.

The present defendants are right to characterize AAR’s

argument that “ AAR International, Inc. Corp.” the named

defendant in the second Athens case, is not AAR, as fatuous.

This is not an Article Nine security interest filing where the

names have to be just right.’ The “nonexistent” defendant

seems to be defending the case just fine, and if it is different

from AAR, AAR has not explained why.

The parties are the same. Are the causes of action? They

need not be identical for proceedings to be parallel as long as

there is a “substantial likelihood” that the foreign litigation

“will dispose of all the claims presented in the federal case.”

Lumen Constr. Inc. v. Brant Constr. Co., 780 F.2d 691, 695

(7th Cir. 1985). AAR contends that the issues in the Athens

case differ because in the present case, AAR “is not seeking

an order for possession or recovery of the Aircraft,” while the

first and third actions seek a temporary arrest or attachment of

the aircraft and an order prohibiting its deregistration and

2

I note that AAR misspelled Vacances’ name throughout as

“Vacance”; it would not have been amused had Vacances replied that

there was no such company. -

D-4

departure, and the second Athens action seeks damages for

breach of lease. AAR also says that nothing the Greek courts

decide will have preclusive effects on a federal action because

different issues are raised in each of these actions.

However, these arguments will not wash, and not just

because on AAR’s own representation the Athens cases do not

seek “‘possession or recovery of the aircraft,” nor because the issue

of parallelism tums on the cause of action and not the remedy

sought. There is a substantial likelihood that those cases will

dispose of all the issues in the federal litigation because a single

member of the Greek court, which normally sits as a panel of

three, has found on an emergency hearing that AAR is liable to

the defendants here (overlapping with some of the plaintiffs there)

and has ruled in a preliminary way on damages. AAR offers no

plausible reason to think that this ruling will be reversed by the

full panel. If there will be anything more to litigate in this matter

than liability and damages, AAR does not explain what it is.

If the ruling was to be upheld, that would probably end the

matter. The Southern District of Texas stated that “there would

be little reason to deny the preclusive effects” of a Greek

judgment when “the recognizing jurisdiction has no concern

with any of the parties or the underlying transaction.” Mpiliris v.

Hellenic Lines, Limited, 323 F. Supp. 865, 874 (S.D. Tx. 1969),

affd 440 F.2d 1163 (Sth Cir. 1971). The factors that led that

court to deny preclusive effect, including different parties, id. at

873, and a substantial federal interest, id. at 874, do not apply

here. Accord Zorgias v. The SS Hellenic Star, 370 F. Supp. 591,

593 (E.D. La. 1972), aff'd 487 F.2d 519 (5th Cir. 1973)(Greek

judgment has preclusive effect when there was there is identity

of the parties and cause of action.). See also Vagenas, v.

Continental Gin Company, 988 F.2d 104, 106 (11th Cir. 1993)

(1951 treaty between United States and Greece, 5 U.S.T. 1829,

elevated foreign judgment to status of sister state judgment).

D-5

Il.

I now must balance the considerations for and against

abstention, bearing in mind the exceptional nature of the

measure, “with the balance heavily weighted in favor of the

exercise of jurisdiction.” Moses H. Cone Memorial Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 16, (1983). The Seventh

Circuit directs me to consider a laundry list of factors: (1) the

identity of the court that first assumed jurisdiction over the

property; (2) the relative inconvenience of the federal forum;

(3) the need to avoid piecemeal litigation; (4) the order in

which the respective proceedings were filed; (5) whether

federal or foreign law provides the rule of decision; (6)

whether the foreign action protects the federal plaintiff’s

rights; (7) the relative progress of the federal and foreign

proceedings; and (8) the vexatious or contrived nature of the

federal claim. Finova Capital Corp. 180 F.3d at 898-99

(citing Colorado River, 424 U.S. at 818)). Taking these in

order:

5

(1) The identity of the court that first took jurisdiction--

Greek--favors abstention. AAR argues that this factor is neutral,

because the issues in the first Athens action were “temporary”;

but jurisdiction is jurisdiction. The second Athens action,

morever, addresses the dispositive issues of liability and

damages.

(2) AAR claims that the relative inconvenience of the

federal forum favors my exercise of jurisdiction because the

Greek forum is inconvenient for an Illinois firm. However,

AAR’s are not the only interests I must consider. The airplane,

many critical witnesses, and documents are in Greece, and the

defendants here are European firms, for whom a Greek forum is

more convenient. I take judicial notice, also, that AAR’s counsel

advertises itself as a global law firm (“One Firm. One World.

Connected.” is the Baker & McKenzie slogan.), and is

presumably able to litigate even in Athens.

(3) AAR also says that the need to avoid piecemeal

litigation favors exercise of jurisdiction because Greek law

D-6

permits multiple lawsuits. However, the avoidance of

piecemeal litigation is supposed to promote judicial economy,

Finova, 180 F.3d at 899, and the most economical use of my

time is to let the Greek courts handle it. To exercise

jurisdiction would promote rather than reduce piecemeal

litigation, since there would be then be three or four cases on

different issues--according to AAR--on two _ continents.

Besides, AAR does not deny that Greek law permits the

consolidation of cases and the filing of counterclaims, which

might be advisable anyway, in view of the probable

preclusive effect of a Greek judgment.

(4) The order in which the respective proceedings were

filed favors abstention because the defendants here filed first

in Greece. AAR argues that the first Athens action was only a

little claim about a _ nondispositive issue conceming

provisional relief, but that action was part of a dispute arising

from a single transaction (the alleged breach of the lease) or

series of transactions. The second Athens action, moreover,

did go to liability for the breach and damages, and was also

filed before AAR went forum-shopping.

(5) Because this is an alienage case, the rule of decision

is provided by Illinois law under the terms of the lease

contract. There is no special federal interest. The Seventh

Circuit said that an alienage case does not “involv{e] the

application of legal rights or principles unique to, or specially

protected by, federal law; the federal interest in_ the

adjudication of a contractual dispute--even one governed by

Illinois . . . law--is far from overwhelming.” Finova, 180 F.3d

at 900.

(6) AAR has four arguments that the foreign action will not

protect the plaintiff's rights: Three of them boil down to the claim

that AAR got adverse rulings in the Greek courts. The Athens

court: (a) would not accept that AAR Intemational was not

identical to AAR Corp; (b) held that AAR may be liable to

Vacances in spite of AAR’s reading of the lease; (c) imposed a

bank guarantee requirement despite its determination that AAR is

ene

D-7

a publicly traded corporation. The principle seems to be that no

court can be fair that does not rule for the plaintiff on every

motion--a natural view for the party losing the motion, but one

without legal support.

AAR’s fourth argument, (d), is that Greece is ranked well

below the United States on the “Transparency Intemational

Corruption Perception Index.” Apparently I am supposed to

exercise jurisdiction because some people perceive that

“Greece” is “corrupt.” There is not a whisper of evidence that

the Athens Court is corrupt.

(7) AAR claims that the relative progress of the federal

and foreign proceedings is not “relevant” because the first and

third Athens actions were only for “provisional relief” and the

second Athens action has only been set for hearing in

December 2000, while I have set an “entirely realistic” trial

date for January 2001. However the defendants are correct

that the Athens court’s findings in its January 25, 2000 order

indicate that the court has made substantial progress in

weighing the merits of the case, which I have not begun to do.

The Greek proceedings are therefore much further advanced.

(8) AAR asserts, finally, that its claim was not vexatious

or contrived but was bona fide and legitimate. Perhaps, but it

is not enough.

Accordingly I GRANT the motion to abstain and

DISMISS the case without prejudice. If there is anything to

litigate in this matter that is not precluded when the Greek

courts are done with it, AAR may file again.

ENTER ORDER:

/s/ Elaine E. Bucklo

Elaine E. Bucklo

United States District Judge

Dated: June 13, 2000

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APPENDIX E:

SECTION 20.B. “NONEXCLUSIVE JURISDICTION IN

ILLINOIS,” AIRCRAFT LEASE AGREEMENT

BETWEEN AAR INTERNATIONAL AND

VACANCES HELIADES S.A.,

DATED MAY 14, 1998

Ke eKEE KE KE

Aircraft Lease Agreement Between

AAR International and Vacances Heliades S.A.

Dated May 14, 1998

KeEKR EE EH

20. GOVERNING LAW AND JURISDICTION

* KK KK KK OK K

B. Nonexclusive Jurisdiction in Illinois

Lessee and Lessor each hereby irrevocably consents that any

legal action or proceeding against it or any of its assets arising

out of or relating to this Agreement or any other Operative

Document may be brought in any jurisdiction where it or any

of its assets may be found, in the courts of the United States

of America for the Northern District of Illinois or in the

Supreme Court of the State of Illinois, as the party bringing

such action or proceeding may elect, and by execution and

delivery of this Agreement each of Lessor and Lessee hereby

irrevocably submits to and accepts with regard to any such

action or proceeding, for itself and in respect of its assets,

generally and unconditionally, the jurisdiction of the aforesaid

E-2

courts and irrevocably agrees to be bound by any judgment

rendered thereby. Nothing herein shall prevent any party

from bringing any legal action or proceeding or obtaining

execution of judgment in any other appropriate jurisdiction.

Lessee and Lessor further agree that a final judgment in any

action or proceeding arising out of or relating to this

Agreement or any other Operative Document shall be

conclusive and may be enforced in any other jurisdiction

within or outside the United States of America by suit on the

judgment, a certified or exemplified copy of which shall be

conclusive evidence of the fact and the amount of the

indebtedness or liability therein described, or in any other

manner provided by Law. Each of Lessee and Lessor hereby

irrevocably waives, to the fullest extent permitted by Law,

any objection which it may now or hereafter have to the

laying of venue of any suit, action or proceeding arising out of

or relating to this Agreement or any other Operative

Document brought in any court in or of the State of Illinois,

and hereby further irrevocably waives any claim that any such

suit, action or proceeding brought in any court in or of the

State of Illinois has been brought in an inconvenient forum.

Lessee shall maintain the process agent specified for it in

Section 20(C), or such other Person located within the State

of Illinois as may be acceptable to Lessor, as its agent for

service of process in the State of Illinois during the Term, at

Lessee’s sole cost and expense. LESSEE HEREBY WAIVES

TRIAL BY JURY IN ANY JUDICIAL PROCEEDING TO

WHICH IT IS A PARTY INVOLVING, DIRECTLY OR

INDIRECTLY, ANY MATTER ARISING OUT OF OR

RELATING TO THIS AGREEMENT OR ANY OTHER

OPERATIVE DOCUMENT.

*HEEXHEE*XE